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NASSCOM gears up its lobbying

A delegation from NASSCOM dropped by at the BW office in NYC yesterday. That's India's software services trade association. They were in the States on their annual media and lobbying tour. In the early stages of the US presidential campaign, the Indian software industry is especially vulnerable. Given the anti-immigrant climate in the US, their issues of offshoring and H1B visa liberalization are likely to be swept up into the campaign--especially at a time of economic uncertainty. "If the economy slows, there will be a tendency to do fingerpointing--to blame somebody," says NASSCOM President Kiran Karnik.

Offshoring never became a huge issue in the last presidential campaign. It's possible that NASSCOM played at least a minor role in that outcome. NASSCOM argued at the time that corporations performing work in India would be good for America. And, indeed, that seems to have come true. US software employment is as high as it has ever been and the job market is tight in the US right now. "We said it would be a win-win situation, and people thought that was just self serving, but it's happening in the UK and the US. There's more hiring," says Karnik. As long as the Western economies don't go south, India might be politically unscathed again during this political season.

On the other hand, NASSCOM and its US allies haven't made any progress on the H1B issue. Early last month, the US received 150,000 applications within a few hours for just 65,000 H1B visas it plans on granting this year--and promptly cut off the application process. The government used a computer-run lottery to decide who got them. US companies have been complaining for years that there aren't enough of these visas to go around, and it's harming their ability to hire some of the smartest foreign graduates of US universities. The Indians use the visas for employees they want to temporarily assign to work in the United States. There's no will in Congress to increase the quota, and no sign of a change in the economic climate that would make lawmakers change their minds.

On other topics...

Talent

A lot of concerns have been raised about the talent situation in India. In fact, it was NASSCOM itself that raised the issue of a talent shortage when it issued a report in 2005 showing that only about 30% of the 500,000 engineering students who graduate from Indian universities and colleges annually are prepared to work immediately in the IT industry. Karnik says the issue is being dealt with in a variety of ways. Indian IT companies typically provide three to four months of "finishing school" training to make fresh graduates employable. But universities and third-party training institutions are now providing classes that give graduates some of the communications and teamwork skills they'll need in the workplace. NASSCOM has written up basic guidelines for the skill set that's required.

While there's a talent pinch right now, Karnik says it will be short. India's huge population of children, together with considerable pressure from their parents on government to provide opportunities for them, means India will have a surplus of talent just at the US and Northern Europe begin to suffer serious shortages of labor due to the retirement of baby boomers.

The rupee

The strong rupee is causing consternation. It has risen 10% against the dollar in 90 days, which is a tough nut for Indian outsourcing firms to swallow. They're making adjustments in their cost structures to deal with it, and they'll also take a hit in profit margins. But they don't expect the rapid rise to continue. And, if they're right, they don't expect a significant impact on the Indian industry. "The rupee will affect margins, but not demand. We'll still get the growth," says Lakshmi Narayanan, the vice-chairman of Cognizant and this year's NASSCOM chairman.